May 15, 2009 - GM Dealers Nationwide

GM dealers to learn today if they are targeted for closure

GM is notifying about 1,100 dealerships that they will be phased out. The auto maker hopes culling its U.S. dealer network will help end its losses

General Motors dealers spent an anxious Thursday watching as Chrysler dealers learned whether they would survive the most massive dealer cutback ever embarked upon by a Detroit automaker.

Today, it is GM's turn.

Around 1,100 GM dealers -- about 18% of the company's U.S. network -- should be receiving letters from the automaker informing them that the company does not plan to renew their contracts that expire in October 2010, according to people familiar with the plans.

GM said it selected the dealerships that weren't meeting objectives set by the company, such as minimum sales volumes and dealer profitability.

It's part of the troubled automaker's efforts to restructure its network of dealerships to match demand for its new cars and trucks. GM hopes to reduce its U.S. dealer count by 42% to 3,605 by the end of next year.

Dealers are on edge, waiting to see whether they are on the list.

"The not knowing is what makes everybody nervous. You just don't know where you stand," said Russ Shelton, owner of Shelton Pontiac Buick GMC in Rochester Hills.

He said it was a tough day listening to radio broadcasts of which local Chrysler dealerships would be closed.

"It reminded me of the school closings in the wintertime the way they listed them off," he said.

"These are longtime family names and family businesses," Shelton added. "That really hurts."

While Chrysler publicly identified its 789 dealerships slated for closure as part of a bankruptcy filing, GM is not in bankruptcy -- at least not yet -- and GM does not plan to release a list of dealerships being closed.

GM said it is preparing for an orderly wind-down of unnecessary stores. "They can transition out of the business by selling down their inventory, and they also have special tools and parts and things like that that they might want to sell," said Susan Garontakos, a GM spokeswoman. GM is staying afloat on $15.4 billion in federal government loans and must restructure its debt by June 1 or face bankruptcy. GM CEO Fritz Henderson has said that bankruptcy was more probable than not.

Original Story - Detroit Free Press

General Motors released this statement Friday.

DETROIT, May 15 — In conjunction with conversations General Motors started with its U.S. dealers today, GM issued the following statement:

As noted in our recent S-4 filing and updated Viability Plan, General Motors plans to reduce its dealer network from 5,969 stores today to approximately 3,600 by the end of 2010.

This process starts today, as GM begins contacting dealers regarding its long term planning. Approximately 1,100 underperforming and very small sales volume U.S. dealers will be advised that GM does not see them as part of its dealer network on a long-term basis. In most cases, existing franchise agreements run through October of 2010.

In addition, we will be updating about 470 Saturn, Hummer and Saab dealers on the status of those brands and we will be discussing how the remaining dealers will support our retail plans going forward. While additional cuts will be made, we believe the vast majority, over 90 percent, of the remaining dealers will be offered a chance to remain with GM. However, specific dealer issues, further attrition and additional possible dealer network actions are expected to bring the number of future GM dealers to around 3,600 by the end of 2010, as described in the Plan. The actual number could vary given levels of attrition, etc. outside of GM’s control.

“We have said from the beginning that our dealers are not a problem but an asset for General Motors,” said Mark LaNeve, GM Vice President of Sales Service and Marketing. “However it is imperative that a healthy, viable GM have a healthy, viable dealer body that can not only survive but prosper during cyclical downturns. It is obvious that almost all parts of GM, including the dealer body, must get smaller and more efficient.”

“In response, we are letting them know about our long term plans. GM’s viability plan calls for fewer, stronger brands as well as fewer, stronger dealers. We have taken a very difficult step by identifying those dealerships we’d like to keep in the GM dealer network and those with whom we will have to wind down our business relationships,” LaNeve said.

As independently owned businesses, dealer owners will make their own decisions if and when they want to make this information public. GM is not releasing the names of any dealers.

“We are not terminating any dealerships today,” LaNeve clarified, “We will be talking to all of our dealers over the next few weeks, letting them know now in the spirit of open communication, so they are advised well in advance, about our long-term plans and their role in them. Long term, GM should have fewer, healthier dealers, maintaining GM’s current high customer satisfaction ratings, with more sales per outlet.”